Issue: College students are going into debt to finance their educations. This negatively affects their credit, ability to afford rising rents and obtain home loans.
Outcome: RCAC’s pilot debt counseling program helps students understand the consequences of debt.
Student loans are one of the fastest growing debt types in the United States, with the number of borrowers doubling in the past decade from 23 to 43 million. The amount of debt has also increased, from $240 billion in 2003 to about $1.3 trillion in 2016. The average 2014 college graduate, according to the Global Financial Literacy Excellence Center (GFLEC), holds nearly $29,000 in student loan debt.
These increases mean more young people are pursuing higher education degrees, but also reflect the overall rising costs of education. As a result, many borrowers struggle to make student loan payments. A 2014 Federal Reserve Bank of New York report found that student loans have the highest delinquency rates out of all consumer debt products. These trends, moreover, affect a student’s future borrowing and the national economy as a whole.
Additionally, studies have shown that many student borrowers did not fully understand the loan details and repayment plans when they agreed to them. According to the GFLEC, more than 50 percent of student loan borrowers said that they would reconsider taking on the loan if they had the chance to do so.
For more than two decades, RCAC has provided training to housing counseling agencies that work with low-income consumers who are buying or renting a home, are homeless, are seeking reverse mortgages, have credit issues or face default or foreclosure. Counselors also educate first-time homebuyers to help them select the right mortgage product and avoid predatory lenders.
Now, in response to the growing student debt crisis, RCAC has a pilot debt counseling program at two colleges. RCAC partnered with the Inland Fair Housing and Mediation Board in California, which will provide counseling services to students at Barstow Community College, to help them understand their loans and repayment plans.